In New York, the founders of Centra Tech are now facing securities fraud, wire fraud, and conspiracy charges related to an alleged cryptocurrency fraud. Robert Farkas, Sohrab Sharma, and Raymond Trapani are accused of fraudulently raising $32M from investors during an initial coin offering (ICO).
Prosecutors claim that the men misled investors into thinking that the Centra tokens they had invested in had partnership deals with Visa, Bancorp, and Mastercard. These agreements supposedly involved the issuance of debit cards that would allow them to spend the cryptocurrency at any business that accepted Mastercard or Visa. Farkas, Sharma, and Trapani are accused of lying about a fake CEO and licenses for money transmitters. They also are accused of making misrepresentations and omissions.
Last month, the Federal Bureau of Investigation arrested the company co-founders and confiscated 91,000 Ether units in digital money valued at $60M.
Farkas, Sharma, and Trapani are also subject to civil charges that were brought by the US Securities and Exchange Commission. The regulator accused Trapani of being the “mastermind” behind the ICO fraud.
SEC Launches Sham ICO Website to Educate Investors
In other ICO-related news, the US Securities and Exchange Commission has launched a fake ICO website in an effort to caution investors of the risks involved with initial coin offerings that prove to be fraudulent. At the moment, the regulator is looking into numerous companies that may be involved in ICO scams.
Its spoof site, “HoweyCoins,” seeks to mock the design of ICO sites. The site comes with a countdown timer and promises of huge returns.
While ICOs legitimately can allow cryptocurrency firms to raise huge amounts of funds—investors are given the opportunity to buy a new cryptocurrency prior it to entering the marketplace—they also have been recently linked to numerous scams.
On the Investor.Gov website, the SEC lists a number of red flags that could signify that the ICO investment offer you are considering may be a fraud, including:
- Promises of high, guaranteed returns
- Celebrity endorsements
- Claims of SEC compliancy
Cryptocurrency Firm Founder Indicted on Federal Fraud Charges, Bloomberg, May 14, 2018
More Blog Posts:
Broker Fraud Allegations Lead to Finra Bars for Northwestern, Fortune Financial, and Morgan Stanley Representatives, Stockbroker Fraud Blog, March 24, 2018
Ex-Wells Fargo Broker Barred for Alleged $180K Elder Financial Fraud, Stockbroker Fraud Blog, February 26, 2018
SEC Accuses Broker of Giving Some Customers Preferential IPO Access in Exchange for Over $1M in Kickbacks, Stockbroker Fraud Blog, January 2, 2018